Changes to the taxation of stapled structures and limitation of concessions for foreign investors - 26 October 2018
A holistic examination of the re-characterisation of trading income derived through the use of stapled structures was announced by the Turnbull Government on 25 March 2017. Various public consultation and debate ensued, culminating in the introduction into Parliament of the Treasury Laws Amendment (Making Sure Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures) Bill 2018 on 20 September 2018.
Consistent with the name of the Bill, the proposed changes are intended to improve the integrity of Australia’s tax system for arrangements involving stapled structures by limiting access to tax concessions previously available to foreign investors acquiring interests in assets through Managed Investment Trusts. In essence, this is to be achieved by increasing the MIT withholding tax rate on fund payments to foreign investors from (typically) 15% to 30% where that fund payment is attributable to non-concessional MIT income.